An Inside Look At The Starbucks App, The Most Successful Mobile Payments System In The US

While many mobile payment apps like Google Wallet have struggled to gain traction with consumers, the Starbucks mobile payments app stands out as a success.

At 6 million average weekly transactions in the U.S., it now accounts for a full 15% of transactions made at the U.S. Starbucks-operated stores.

In a new research note from BI Intelligence we take a deep dive into how the Starbucks app works, why it's so popular and whether other retailers could have success with a similar mobile payment model.

Here are some of the key takeaways from the note:

A billion-dollar volume driver: The Starbucks app is on track to process over $1.5 billion in payment volume in the U.S. in 2014, according to our estimates. In the second quarter it accounted for 15% of the transactions in U.S. company-operated stores, averaging 6 million transactions per week.

Customer loyalty to Starbucks plays a role: Starbucks stores are everywhere, coffee is purchased habitually, the app incentivizes regular purchases through its rewards-loyalty program, and the app works on the majority of smartphones. The app's success is not due to the ease of payment with a phone. So it has succeeded despite the fact that it is not more convenient than credit or debit cards or cash.

Opportunities for growth: There are a number of features that could help reinvigorate growth including order-ahead capability and beacon-powered alerts and offers.

Other retailers could emulate Starbucks' success: These retailers include quick service restaurants, gas stations, grocery stores, and pharmacies. Starbucks has said it is in talks to license the app's technology as a white label solution.

In full, the research note:

Gives a detailed walk-through of the Starbucks app.

Explains how the features of the app and Starbucks' business as a whole have contributed to the apps success.

Analyses whether slowing growth in mobile transactions is a problem and what Starbucks can do to reignite it.

Identifies why four types of retailers could emulate Starbucks' success with their own mobile payment apps.

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